Users hoping for a free-for-all price war following BT Openworld's decision to shave up to a fifth off the monthly cost of its Business Plus ADSL broadband services are set to be disappointed.
Tim Johnson, a broadband analyst at Ovum, said that rival internet service providers (ISPs) do not have the resources to slash prices.
He suggested that most future competition will come from the take up of symmetric digital subscriber line (SDSL) services, rather than switching to cheaper ADSL connections.
SDSL has the benefit of providing users with the same level of bandwidth upstream as well as downstream.
"I don't see this starting a price war," Johnson told vnunet.com. "Business customers are not so price sensitive, and ISPs can argue that by offering additional services it is worth paying an extra £10 or so.
"The only way I can see a price war is if an ISP other than BT decides to cut costs, but I don't see this happening as ISPs don't have the margins to cut costs."
Competing ISPs do not, publicly at least, appear threatened by BT's move.
They claim that many of their business services are either still cheaper than BT's or compare well because they include value added services such as mail forwarding and web hosting.
For example, BT's Business 500PLUS (512Kbps) will be cut from £79.99 to £65 per month, Business 1000PLUS (1Mbps) from £119.99 to £100 per month, and Business 2000PLUS (2Mbps) from £149.99 to £130 per month.
Demon's business services, which it believes are comparable to BT Business Plus, cost £39 per month for the 500Kpbs service, £55 per month for the 1Mbps service and £69 per month for the 2Mbps service. Both BT's and Demon's prices are ex VAT.
A spokeswoman for Demon said: "Our prices are still competitive to BT's and we offer a range of services on higher end packages."
BT's price cuts will take effect from 1 September for new customers and on a pro rata basis for existing customers, with quarterly bills adjusted accordingly.
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